There is no reason for the Bank of England to keep interest rates at anything like 5% – so why are they going to do so?

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This is data on the consumer price index for the last year or so published this week by the Office for National Statistics:

Why show it here? That's because this lunchtime, the Bank of England will almost certainly refuse to cut interest rates, saying that they cannot be sure that the supposed battle against inflation has been won as yet.

However, look at the figures highlighted in yellow in the above table, and you will see that, since May last year, there has been almost no change in the overall consumer price index. In other words, with minor variations from month to month apart, the so-called battle on inflation has been won, and the evidence that this is the case is overwhelming.

If high interest rates were meant to beat inflation, then there is no remaining case for keeping them high. If, as I suspect, there will be no change in rates, what then will be the reason for keeping them at the extraordinary levels that they are now at? Could it be pure politics, with the aim of making the rich richer?


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